AirAsia India promotors go for aggressive expansion plans, infuse Rs 466 crore

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Published: December 10, 2019 4:05:01 AM

AirAsia India, which started operations in June 2014, is awaiting the government’s permission to operate on international routes.

AirAsia India, airasia, flash ticket sales Tata Sons, AirAsia Berhad, SpiceJet, Vistara, Singapore AirlinesAirAsia is the fifth-largest domestic carrier after IndiGo, SpiceJet, Air India and GoAir with a 6.5% market share in October 2019.

Tata Sons and AirAsia Berhad – promoters of low-cost carrier AirAsia India – have infused Rs 466 crore into the carrier to fund its aggressive expansion plans. While Tata Sons put in Rs 237.8 crore into the budget carrier, AirAsia Investment has injected Rs 228.4 crore, according to a filing with the Ministry of Corporate Affairs.

The promoters had invested Rs 500 crore during the last round of funding in April 2019. AirAsia India, which started operations in June 2014, is awaiting the government’s permission to operate on international routes. Tatas, which also run full-service carrier Vistara in partnership with Singapore Airlines, control 51% in AirAsia India while 49% is held by Malaysia-based AirAsia Berhad.

Last week, Vistara promoters had invested Rs 600 crore to fuel the airline’s international growth plans. AirAsia is the fifth-largest domestic carrier after IndiGo, SpiceJet, Air India and GoAir with a 6.5% market share in October 2019. Domestic carriers have gained market share since Jet Airways shut operations in April 2019.

AirAsia carried 5.3 million passengers from April-October, up 30% year-on-year from the same period last year. Its domestic market share was 5.9% in March 2019. Since then, the airline strengthened its existing network and added new routes like Mumbai-Goa and Mumbai-Chennai. Its domestic capacity has jumped around 30% y-o-y so far in FY20.

The airline’s weekly departures increased by 326 to 1,345 flights in the ongoing winter schedule as compared to the year-ago period. The Bengaluru-based carrier has plans to increase its fleet size to 100 in the next five years, from 27 aircraft of the Airbus 320 family at present.

According to analysts, airlines require cash as airfares have witnessed significant y-o-y decline since October 2019, impacting yields. “The airlines’ are looking to improve cash flows by raising money and flash ticket sales. Airlines are pricing tickets very competitively to fill new capacities,” an analyst pointed out.

In Q1FY20, AirAsia India narrowed its loss before tax to Rs 15.1 crore from Rs 62 crore in the same period a year back, mainly because of Jet’s closure. However, its loss before tax in Q2FY20 stood at Rs 310 crore, against Rs 308 crore in the same period a year back. AirAsia India’s losses increased five-fold to Rs 670 crore in 2018-19 because of high fuel costs, weak rupee and competitive fares.

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